Shell's Plan to Drill for Oil in the Beaufort Sea This Summer

While backlash from BP's Deepwater Horizon oil spill has forced Shell to scale back its extensive plans to drill offshore for oil in the Arctic, the company still hopes to start at least one exploratory well this summer. But is it safe? Deputy editor Jerry Beilinson reports from Alaska.

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If Royal Dutch Shell gets permission to sink an exploratory well next summer in the Beaufort Sea, which lies north of Alaska and east along the curve of land that begins at Point Barrow, the company's Noble Discoverer drillship will depart for the site from Unalaska Island in June. Unalaska, which is 800 miles southwest of Anchorage in the Aleutian Islands, is often short-handed as Dutch Harbor. It's the home port for the fishing vessels featured on the television show Deadliest Catch and, remarkably, it is the closest deep water port to the North Slope of Alaska. The Discoverer will churn 1300 nautical miles north and then east, past Inupiaq communities such as Nome and Wainwright, through the Chukchi Sea. It will pass Point Barrow, entering the Beaufort, and by early July will arrive at a long-determined set of coordinates not far from the village of Kaktovik, about 15 miles from shore in Camden Bay. This, coincidentally, is about as far from shore as Inupiaq hunters travel in their open boats during whaling season.

Many billions of barrels of oil and an equivalent amount of natural gas may lie beneath these waters, yet no energy company has found it economically worthwhile to drill offshore in the American arctic in nearly 20 years. There's no infrastructure for oil-spill response—or even for resupplying an offshore rig. Therefore, the Discoverer will be attended by a half-dozen smaller vessels, including a pair of oil response vessels, barges, and an ice-breaking ocean tug almost certainly contracted from Sweden.

Offshore oil-and-gas exploration is accelerating throughout the circumpolar region: In 2010, Cairn Energy became the first company in decades to drill off the coast of Greenland, and many additional oil companies have puchased leases there; Norway and Russia just resolved a boundary dispute in the Barents Sea in which the only real stake was fossil-fuel wealth; and both the United States and Canada are considering massive pipeline projects to carry natural gas to southern markets. How quickly these projects develop will depend on pricing, regulation and other factors, but it seems clear that sometime in the next few decades, the arctic will be supplying a significant portion of the globe's fossil fuels.

The Discoverer hadn't yet arrived in Unalaska when I visited in December, but an oil-spill response ship called the Nanuq was already in port in anticipation of joining the Beaufort project, along with the Kulluk, a Shell oil rig with a long history in the arctic. (Also in port was the Tor Viking II, an 18,000-hp ice-breaking tug leased by Shell that had just made national news by rescuing the Golden Seas, a freighter that was in danger of foundering farther out in the Aleutian Chain.) The plan for the Kulluk was to stand by in Dutch Harbor in case the worst should happen and the Camden Bay well experienced a blowout that, first, required the drilling of a relief well and, second, incapacitated the Discoverer.

On the approach to the Dutch Harbor airport, our Saab 340 charter plane dove through rain clouds and banked hard between peaks that plunged from ice to black rock and into the surf. The plane roller-coastered over the last few hundred feet, then decelerated sharply once it landed, stopping with runway to spare. There were about 30 of us onboard, mainly Inupiaq from the North Slope and the northwestern region of Alaska, whom Shell had flown down to meet with engineers and executives, and to see oil-spill response technology.

Patrick Savok, a tall, 30-something assembly member from the village of Kotzebue on the northwest coast, had a hipster look, with a goatee, Chinese characters tattooed on his neck, and stylish rectangular eyeglasses. Inupiaq villages stand to receive fees and perhaps job growth from oil development—the economy already depends heavily on oil revenues—but locals are most interested in measures to minimize the impact on hunting. Savok's family is one of many that rely on bowhead whales, seals and other wildlife for subsistence. "I'm worried about my meal, and about my children and grandchildren. But if we just say no to the drilling, it will happen anyway," Savok told me. "We want to stay involved and get the best deal we can."

While off-shore drilling in the Arctic Ocean is barely on the radar of most Americans, it seemed like an inevitability to every Inupiaq I spoke with. Shell is certainly showing itself to be persistent. The company has paid more than $2.2 billion since 2005 to acquire drilling leases in the Beaufort Sea and the Chukchi Sea, and it is, by far, the biggest offshore leaseholder in the region. At first, legal challenges prevented the company from drilling, and then the 2010 season was cancelled in the wake of the Deepwater Horizon spill in the Gulf of Mexico. The Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) is now reviewing the company's 2011 permit—apparently with more caution than was showed by its predecessor agency, the Minerals Management Service, which was reorganized and renamed after the Deepwater Horizon spill.

While the regulatory process has ground on, Shell executives have spent their time meeting with local officials in the coastal villages, and investing in technology such as the Nanuq, a 301-foot, ice-class ship. Shell had the Nanuq built in 2007 for more than $100 million. Up on the bridge, expansive windows looked out in every direction on dramatic Bering Sea scenery and bald eagles that flocked like seagulls to pilings and Dumpsters onshore.

Inside, the space superficially had more in common with a Star Trek set—from the high-tech monitors down to the architecturally contoured captains' chairs—than with, say, the vintage Coast Guard cutters that patrol these waters. David Morse, the ship's relief captain, walked me through some of the computer displays. He called up diagrams revealing the power going from each engine to the propeller shaft and to the ship's generators. Then, he toggled over to real-time illustrations representing the ballast in the ship's tanks, the electrical system, and the ship's fuel-storage capacity. Another monitor was devoted to the Nanuq's dynamic positioning system. (The vessel can stay within one meter of its position in 70-knot winds and 40-foot seas, and it can stay on course at a speed of just half a knot, far below the speed at which most ships lose their steering—an important ability for a ship cleaning up an oil slick.)

In contrast to the bridge, the long stern deck that would be the center of activity during an oil spill seemed surprisingly old school because of the boardwalk-style wooden planking underfoot. Edgar Caldwell, a bear-size oil-spill response supervisor, explained above the wind that the wood was chosen to minimize friction as the crew deployed oil containment boom and other equipment. Then he walked us through some key pieces of his arsenal, shouting in a quick, guttural patter. A giant reel held 750 feet of inflatable boom; the Nanuq would carry four of the reels, and a second spill-response vessel would add another four. A collection system featured eight 40-foot rope mops designed to soak up oil. The ropes were shaggy, covered with white strips that felt a bit like the plastic leys DJs give out at Hawaiian-themed parties. Other equipment at Shell's disposal include transmitting buoys that can float along tracking a slick as it drifts, side collectors that have five rows of brushes to soak up oil, and minibarges that can each hold 249 barrels of recovered oil.

Edgar Caldwell was in the Gulf of Mexico last summer, working the Deepwater Horizon spill. During that 4.9-million-barrel disaster, as many as 6500 ships were deployed, along with 3 million feet of containment boom. Yet estimates put the total amount of oil recovered or burned at only about 25 percent. During an Arctic Ocean spill that extended into the fall, workers could have to contend with near hurricane-force winds, ice formation, white-outs, severe cold and dark. Given all that, how much oil did he hope to recover if there were a spill? "I think I can get it all," he said.

In the Gulf, Caldwell argued, the oil passed through thousands of feet of water before it reached the surface, giving it more opportunity to disperse. And while the Gulf of Mexico had immense spill-response resources, they took time to deploy. Shell plans to have its primary oil-spill equipment onsite during the drilling. Brent Ross, Shell's Alaska operations manager, made similar points when I spoke with him by phone earlier this year. "In the Gulf, you had thousands of vessels on the payroll that weren't necessarily doing anything. Ninety percent of the oil was collected by 10 vessels," he told me.

Caldwell trains a lot, but he's never practiced with actual crude oil poured into the sea ice. It's illegal in the United States, and I asked whether that should be reexamined. "Part of me says yes, because I want to see how this stuff works," he said. "But part of me says no—it's my water." Caldwell told me that he had grown up in Barrow—his Inupiaq name is Nivikana—and as the conversation continued, he confirmed that he'd been out hunting in seas that would be too rough for his equipment to handle: The Beaufort is nothing like the Bering Sea, he said, but it does get bad up there.

From 2006 to 2009, a Norwegian research organization called SINTEF investigated how well oil-spill response techniques worked in arctic seas, in a program funded by Shell and other oil companies. In contrast to the United States, Norway does allow the occasional discharge of crude into the ocean, and SINTEF conducted what it calls two "large-scale field experiments" in the Barents Sea. In one exercise, researchers poured more than 1800 gallons of oil (equivalent to 44 barrels) into the sea, to study how it dispersed over time. The researchers also ignited about 500 gallons of oil floating in water with 80 percent ice coverage, and tested chemical dispersants, booms and skimmers. The results varied: In-situ burning worked best, while mechanical recovery was the most problematic—ice coverage of even 10 to 20 percent hampered the use of booms. None of the testing took place in severe weather conditions, and, of course, the quantities of oil involved were tiny when compared to a major incident such as the Deepwater Horizon and Exxon Valdez spills.

Marilyn Heiman, the director of the Pew Environment Group's Arctic Program, applauds the research effort, but thinks the industry still has work to do to ensure safety. We met at a tiny Anchorage café called Side Street Espresso so she could talk me through a report on arctic offshore drilling her group released in November 2010. One recommendation was to require full-scale field tests of oil-spill response capabilities in a variety of ice and weather conditions. More broadly, Heiman said she'd like to turn BOEMRE's approach to lease sales inside out—instead of opening tens of millions of acres at a time, she argued for "a surgical approach," in which regulators would pinpoint a few areas to study intensively for potential oil development.

Heiman was a staffer working on oil issues for an Alaskan state legislator when the Exxon Valdez spill occurred in 1989, and she later joined a commission that investigated the disaster. "It took weeks to mobilize a response—nobody had looked at the equipment in years," she told me. Today, she thinks Prince William Sound has the best response capability in the world, largely because it involves fishermen who are experts on the local currents, and who review plans and train to deploy in case of a spill. "None of that is happening yet in the Arctic," she said. "The industry has to listen to the folks who live up there—really listen. Their traditional knowledge is a lot more advanced than our scientific knowledge of that region."

Recovering oil spilled in the ocean is so difficult that it can best be considered a last-ditch effort to cope with a profound failure of engineering and management. Preventing that kind of disaster is part of Mitchell Witaker's job. Witaker will oversee Shell's drilling operation if it occurs next summer; he is the very model of a veteran oilfield man. He's spent more than 25 years drilling wells, mainly in the Gulf. He pronounces "mud" very close to "mood," and he can methodically explain the function of every bolt on his oil rigs. Witaker went up to the Mackenzie Delta in the Canadian arctic a few years back to recover the Kulluk, which had been a ghost rig frozen in the ice for almost a decade. It was creepy: Seabirds had used twigs to build nests all over the superstructure; Witaker opened a jar of peanut butter left on a counter and found it still smelled fresh.

If drilling is approved, Witaker's crews in Camden Bay will begin by deploying eight 20,000-pound anchors to secure the Discoverer to the seafloor 80 feet below. They will then use a round bit that measures 22 feet across to drill a 40-foot-deep mud cellar where the blow-out preventer can sit, safe from any ice that might scour the seafloor. The crews will drill to about 200 feet below the mudline, securing 30-inch casing and building the structure that will support the blow-out preventer and other vital equipment, before moving on to deeper drilling. Like a lot of men who have spent their lives doing mechanically sophisticated and potentially dangerous work, Whitaker exudes an aura of sheer competence. As he described the process in detail, it was hard to imagine him ever engaging in the kind of cavalier decision-making that helped doom the Deepwater Horizon.

No matter how responsible Witaker and his colleagues may be, the Inupiaq have a number of concerns about offshore drilling. One is noise: Whales have preternaturally acute hearing, and Inupiaq hunters will paddle miles from shore to avoid spooking the animals with their putt-putt outboards. The company has signed a "conflict avoidance agreement" to leave the area before whaling begins, and has installed underwater acoustic recorders in the Chukchi and Beaufort Seas to study its own sound footprint. Executives have pledged to take a wide range of other environmentally sensitive measures, as well.

Most of the Inupiaq I spoke with credited the company with good intentions, but they remained skeptical, in part because of the pressures they already feel. Polar bears are becoming scarce, and international conservation agreements have made it harder for hunters to harvest migratory birds. One resident of Kaktovik told me that scientists, politicians and other visitors to the Arctic National Wildlife Refuge flying overhead have been unintentionally spooking the caribou near her town, making those animals harder to hunt. The strongest opposition to the drilling was voiced by Martha Whiting, the mayor of Kotzebue. "The resources will be extracted and someone else will get rich, while we take all the risk," Whiting said during one meeting. "And then you're going to leave. And who's going to be stuck there? My people." Whiting praised Shell for its community outreach—but ultimately the company represents the point of the spear of an industrial world encroaching on the Arctic Ocean, an environment in which it's a minor miracle that the Inupiaq way of life has survived at all. Ironically, while the culture is threatened by oil development, it also has persisted partly because of oil revenues, which have spared Inupiaq villages the dire poverty that affects many native Alaskan communities.

When Whiting and her counterparts left Dutch Harbor to return to their villages, BOEMRE was still considering Shell's permit application. Whaling season was over, the long winter's night was closing in and the sea ice was thickening. It was the start of a long winter, and it was impossible to say what the spring would bring.